Long Election-Year Economics Debate Ahead

From child care for the toddler set to tuition credits for college students and better medical benefits for veterans, John Kerry (search) has plans to distribute new federal dollars far and wide and still cut the deficit in half within four years.

Stock up on calculator batteries, though, because just how many dollars go where and whether Kerry's economic numbers really add up is sure to be the subject of heated debate in the presidential campaign for months to come.

It's early to be toting up the cost of campaign proposals, but President Bush jump-started the conversation Thursday with a new ad claiming that Kerry would raise taxes by $900 billion, which the Democrat immediately rejected as bogus. Kerry's campaign promises to fill in details of his economic plans soon.

Key to the debate is how much mileage Kerry can get out of repealing tax cuts for the wealthiest Americans and redirecting that money — about $250 billion over 10 years, by most estimates — to those he deems more deserving. By far, his biggest-ticket proposal is a plan to extend health insurance to millions of uninsured people and reduce costs for those who already have coverage.

The health plan alone is estimated to cost nearly $900 billion over 10 years, according to an independent analysis last summer by Emory University economics professor Kenneth Thorpe. Thorpe said Thursday that he believes Kerry can find enough federal dollars elsewhere to pay for his proposals for health care, education and other initiatives.

"It's probably doable, with the caveat that there's got to be some phasing-in and timing," he said. "You can't do it all in year one."

Mark Zandi, chief economist with Economy.com, said it's hard for any campaign to know how much its proposals really will end up costing. As for Kerry, he said, "you have to get it broadly right, and I think he's got it broadly right."

However, there are plenty of skeptics who think Kerry is overreaching.

"There's no way he can get from here to there," said Dan Mitchell, an economist at the conservative Heritage Foundation. He said Kerry hasn't released enough details to accurately add up what he would raise and spend — most likely on purpose.

"When you're running, you go after the other guy, you don't put out a detailed plan that the other guy can attack," Mitchell said.

Nonetheless, using a mix of firm numbers and estimates, the National Taxpayers Union, which advocates lower taxes and less government spending, calculates that Kerry's new spending initiatives would cost $277 billion a year — far more than could be paid for by repealing some of the tax cuts. Among Kerry's biggest annual costs, by the group's calculations: $90 billion for health care, $41 billion for veterans' health programs, $56 billion for education and $31 billion for roads and rail lines.

Peter Orszag, a Brookings Institution economist who has given occasional help to Kerry's campaign, said it's possible to get to $900 billion in Kerry tax increases by toting up $400 billion to repeal some of the tax cuts and retain a phase-out of personal exemptions and itemized deductions for wealthy Americans, $150 billion in estate tax reforms and $350 billion in higher taxes on capital gains and dividends. He said Kerry also has other proposals to save money, such as reducing so-called corporate welfare and holding down health care costs, that could be redirected to his domestic initiatives.

Claims and counterclaims about budget numbers are a staple of presidential campaigns. Bush, for example, frequently faulted Al Gore (search) for "fuzzy math" in the 2000 campaign.

"During campaign time, the numbers never add up on either side," said Eugene Steuerle, a senior fellow at the liberal-leaning Urban Institute. He said it appears that Kerry is likely to follow the model of President Clinton, who promised deficit reduction but also a tax cut as a candidate.

"Before he was even inaugurated, the Clinton people sat down and decided to abandon some of their campaign promises, at least temporarily, until they got the deficit in order," said Steuerle. "It's my sense, regardless of whether Kerry or Bush wins, that the entire economic agenda has been set up for 2005 to be the year in which we actually get back to worrying about getting this budget in balance."

William Gale, co-director of the Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, said that in the end, what's more important than specific numbers are the broad themes Kerry is striking and how they differ from Bush's.

"Kerry is clearly someone who believes that government can be part of the solution to domestic problems, not just something that's in the way," Gale said.